From Sony to Kakao, Here Are the Asian Company Earnings to Watch
Asia’s earnings spotlight shifts to Japan this week with Toyota, Sony and Nomura scheduled to release quarterly results. As Bank of Japan’s ultra-easy monetary policy continues to pressure the yen, investors will be on high alert for any adjustment to Japanese companies’ forecasts.
(Bloomberg) — Asia’s earnings spotlight shifts to Japan this week with Toyota, Sony and Nomura scheduled to release quarterly results. As Bank of Japan’s ultra-easy monetary policy continues to pressure the yen, investors will be on high alert for any adjustment to Japanese companies’ forecasts.
In other parts of the region, Macau casino operator SJM Holdings and Singapore Airlines are expected to announce earnings as well. It is worth watching out for how the companies evaluate the impact of Covid restrictions in China amid recent flare-up of cases, which triggered workers departing Apple’s biggest iPhone plant in China and new rounds of mandatory Covid tests in Macau.
Adding to the uncertainties, Federal Reserve officials will meet for their Nov. 1-2 policy meeting, at which they’re expected to raise the benchmark lending rate by 75 basis points for a fourth-straight time. With last Monday’s historic selloff of Chinese stocks in the US and Hong Kong still fresh on traders’ minds, the market could react strongly to any earnings disappointment or policy shifts.
- To subscribe to earnings coverage across your portfolio or other earnings analysis, run NSUB EARNINGS function on the Bloomberg terminal.
- Follow results, analysis and market reaction to Nomura’s report in real-time on the TOPLive blog.
- For more on what’s going on in other regions, see the US Earnings Week Ahead and the EMEA Earnings Week Ahead, and the ESG Stock Watch for a selection of environmental, social and governance themes that may come up on this week’s earnings calls.
Highlights to look for this week:
Monday: SJM Holdings (880 HK) will announce third-quarter results after market close. Adjusted Ebitda loss for the July-September period is expected to widen to about HK$758 million ($97 million) from HK$460 million a year earlier, according to Bloomberg consensus. Macau casino operators have had a few tough years with China’s crackdown on corruption followed by Covid-19 curbs. SJM may have suffered more than its peers as it took over 10 satellite casinos in June and its operating expenses will rise faster than revenue, Bloomberg Intelligence’s Angela Hanlee wrote. The sector is pinning its hopes on more Chinese visitors to bring in much-needed revenue as local government has said that the resumption plan for Chinese group tours won’t be affected if no community Covid cases are found in the city. Still, investors may approach Macau casino shares with trepidation as the government on Sunday asked residents to undergo three days of rapid Covid tests and locked down the MGM Cotai resort.
- ESG in Focus: LG Chem Ltd. (051910 KS), along with subsidiary LG Energy, has announced several multi-billion dollar deals that will help the Korean manufacturer stake its claim in the burgeoning US electric vehicle market, as well as qualify its batteries for incentives included in the Inflation Reduction Act. Thanks to its US-based plants, just under half of LG Energy’s production costs could be subsidized under the IRA, providing a major boost to profit margins. To read more, see the ESG Stock Watch.
Tuesday: Toyota Motor (7203 JP) is set to report second-quarter earnings during trading hours. The auto industry has been hit hard by parts shortages and Covid lockdowns in China, and the world’s biggest carmaker is no exception. It recently warned that it expects to miss its target of manufacturing 9.7 million vehicles this fiscal year due to ongoing difficulties in procuring semiconductors and other components. The market will be looking for updated guidance on that front. Adding to its woes, Toyota likely can’t count on a weakening yen to significantly boost income — it didn’t raise its full-year operating profit forecast last quarter despite revising its foreign exchange assumption, as it expects to be weighed down by soaring raw material costs.
- Weak Yen: Sony Group (6758 JP) is scheduled to release second-quarter results after market close. Analysts expect the Japanese electronics and entertainment giant’s operating profit to have dropped 14% from a year earlier, according to a consensus estimate. Its gaming business might have been weighed down by PlayStation 5 production bottlenecks and yen weakness due to dollar-based costs, according to Bloomberg Intelligence. The Tokyo-based company has said conditions for the flagship console are improving, and investors will be looking for updates heading into the holiday shopping season. Meanwhile, image sensors used in recently-launched iPhones may provide a bright spot, as could the movie and music businesses, all of which are expected to benefit from a weaker yen, BI said.
Wednesday: Nomura Holdings (8604 JP) will announce second-quarter earnings after market close. Japan’s largest brokerage barely made a profit in the previous three months amid a fall in underwriting and losses tied to its stake in mutual fund manager American Century Investments. While Chief Executive Officer Kentaro Okuda has pledged to diversify revenue streams and cut Nomura’s dependence on fixed income, the process may not immediately bear fruit, with Bloomberg Intelligence saying income recovery could be slow due to weak equity and investment trust sales. Investors will also be watching how the company’s retail business stacks up compared to smaller rival Daiwa Securities Group, which reports earnings on Monday, after falling behind for two straight quarters.
Thursday: Kakao Corp. (035720 KS) plans to release third-quarter results in the morning. The operator of South Korea’s most widely-used mobile messaging app and taxi-hailing app is likely to post an 8% increase in third-quarter operating profit to about 182 billion won ($128 million), according to an average consensus of 24 analysts polled by Bloomberg. Investors are expected to focus on the company’s comments on the impact of a data-center fire on Oct. 15, which caused a nationwide service blackout and prompted one of its co-CEOs to step down. Since then, multiple brokerages have lowered their price targets on Kakao, with JPMorgan analyst Stanley Yang slashing his 39% to 46,000 won, the lowest price target contributing to Bloomberg consensus. Speaking at a parliament audit hearing in Seoul last Monday, Kakao founder Brian Kim apologized for the service disruptions and promised compensation as lawmakers considered stepping up scrutiny of the company.
Friday: Singapore Airlines (SIA SP) will release its second-quarter earnings after market close. As travel rebounds, operating profit for the quarter is expected to rise for the first time since the start of the pandemic to over S$600 million, thanks to a 22% increase in revenue passenger kilometers, according to Bloomberg Intelligence. First-half earnings may reach about S$1.2 billion. In September, the airliner reported group airlines passenger load factor of 87%, compared to 18.5% a year earlier. The carrier saw continued momentum in travel recovery across all route regions except for East Asia, where restrictions remained in place in some key markets. Strong demand could have lifted yield and supported profitability amid higher fuel and staffing costs, as well as helped to offset a drop in cargo profits as pricing wavered amid weakening global freight demand. The company is also likely to maintain a strong balance sheet even after redeeming S$3.5 billion of mandatory convertible bonds, BI said.
(Updates top graphs and adds highlights for LG Chem and Singapore Airlines.)
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